Turning Lemons Into Lemonade: What Is Happening with All That Unused Jet Fuel?

As everyone knows, the airline industry took a major hit in the year of Covid. International travel was curtailed and domestic travel minimized. Bailouts helped the industry stay afloat, only because if all the airlines went bankrupt how will e get around when the curfews lift?

All these issues were in the news this past year, but a story in Ag Week yesterday gave us a glimpse of another facet of the restricted air travel. Because less jet fuel was needed for air travel, more was available to be converted to diesel fuel. As a result, the price of diesel could remain stable or even better for 2021.

The Ag Week article by Jonathan Knutson cited remarks from bioenergy and bioproducts economist David Ripplinger, who spoke (virtually) at a farm show in North Dakota. 

"This is really important to agriculture. We can convert and modify jet fuel into diesel fuel, which is great (for agriculture.). They're trying to find a home for all of this fuel that used to be jet fuel. That's a really bullish thing for agriculture" as the new crop season approaches, he said.

"It's a good sign that diesel fuel (prices) will be low. This is good for North Dakota farmers who might be looking to go into those diesel markets to buy fuel, including early for spring. I don't see any reason why we would see the significant disruptions and storage issues that we saw in the spring of 2020," he said.

We've all had to make many adjustments this year. It's not a stretch to say that it has been a year that's made us seek out new ways to turn lemons into lemonade.

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You can read the full story here. 

Are 2021 Diesel Events Just Around the Corner?

The rumble of diesel power is approaching on the horizon. Can you hear it?

The other day I saw a Tweet that proclaimed the first performance diesel competition of 2021 is coming. It's hard to say which events will really take place and which will be postponed another season. 

When the 2021 Outlaw Diesel Series schedule was announced in November, there was a lot of optimism in the air. With all the media noise about spiking Covid, it's hard to know what will really unfold and which will have to be folded up. I know of at least one early diesel event that already got shuttered.

You'' find the dates and classes for the 2021 Outlaw Diesel Series here and to stay current with event announcements you'll want to follow the Outlaw Diesel Superseries on Facebook. The first one listed is Rudy's, April 23-24. Will we pull it off? Place your bets.

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Planning to Scheid's Diesel Extravaganza at summer's end? The dates this year are August 27-28. Get your tickets here. Seems like a long ways off, but it will be here before you know it. 

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Tomorrow is our Winter Solstice when the tilt of the earth's North Pole is furthest from the sun. Beginning Tuesday, the days will begin getting longer. Historians tell us that peoples and cultures have been celebrating this event since pre-history. Whether you celebrate or hibernate tomorrow, let's look forward to a brighter year ahead.

The Impact of the Pandemic on Oil and Gas

This summer I was talking with a friend from Texas about the situation there with regard to oil and gas. When the market price of oil goes below a certain point, he said, they just shut everything down and leave it in the ground. That's because it costs more to bring it to market than they will get when they sell it. The oil rigs are thus left idle.

It's been a tough year for the oil industry. The Covid pandemic has dealt a lot of people a bad hand, but we have to play the cards we're dealt. 

I remember a number of years back when the six top companies in the Fortune 50 were automakers and energy companies. Mobil and Shell were slugging it out for the top slot for a while back then. Remarkable as it seems, Mobil was dropped from the Dow Jones Industrial Average this summer. Today the five biggest companies are technology giants. According to the Washington Post, any one of the top five--Alphabet, Amazon, Apple, Facebook and Microsoft--is larger than all 76 companies in the energy sector combined.

Yes, you read that right. 

Part of this is due the long term trend toward renewable energy. Nevertheless, the pandemic has done more than make a dent. When people stop flying, and people stop driving to work every day--in other words, when people stay home they consume less fuel. Combine this with an oil glut due to other factors and you have additional hurdles for the energy companies.  

It's not all bleak news for oil companies. With people in larger cities avoiding public transportation, many are buying cars again. In addition, large numbers of city dwellers are considering leaving city life altogether. Moving to the burbs means more driving as well.

The author also points out that with people shopping less, there are more deliveries being made by Fedex, UPS and other providers. Those engines need to be taken care of as well.

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I began by mentioning that conversation with my friend in Texas. I'd been thinking a lot about the relationship between prices of crude and prices at the pump for diesel owners. As it turns out, there happens to be a Technical Bulletin at the Champion tech bulletins page titled Why Lubricant Prices Don't Mirror Crude Prices. In this case it's information from the Independent Lubricant Manufacturers Association (ILMA). 

The article begins, "Changes in the prices of lubricants, and the base oils that are their foundation, do not mirror either those of crude oil or gasoline. Supply and demand over time is the fundamental price-setting mechanism for lubricants and base oils." You can read the full story here.

You can find that and other useful information by clicking on the Diesel Technical Bulletins button in the right hand column above. And if you can't find what you're looking for you can always Ask Jake.

The rest of the information here is from an article titled How the pandemic is harming the oil and gas industry. 

Navajo Refinery photo by Robin Sommer on Unsplash